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Plant, Property, and Equipment

12 Months Ended

Dec. 31, 2023

Public Utility, Property, Plant and Equipment [Line Items]

Presented in the following table are details of CMS Energy’s and Consumers’ plant, property, and equipment:


In Millions
December 31	Estimated Depreciable Life in Years	2023			2022
CMS Energy, including Consumers
Plant, property, and equipment, gross
Consumers	3 – 125		$	31,723		$	29,342
NorthStar Clean Energy
Independent power production1	3 – 40		1,387			1,124
Assets under finance leases2			24			24
Other	3 – 5		1			1
Plant, property, and equipment, gross			$	33,135		$	30,491
Construction work in progress			944			1,182
Accumulated depreciation and amortization			(9,007)			(8,960)
Total plant, property, and equipment3			$	25,072		$	22,713
Consumers
Plant, property, and equipment, gross
Electric
Generation	15 – 125		$	6,511		$	5,780
Distribution	15 – 75		11,339			10,590
Other	5 – 55		1,355			1,374
Assets under finance leases2			97			126
Gas
Distribution	20 – 85		7,452			6,951
Transmission	17 – 75		2,806			2,440
Underground storage facilities4	27 – 75		1,295			1,197
Other	5 – 55		815			835
Assets under finance leases2			15			20
Other non-utility property	3 – 51		38			29
Plant, property, and equipment, gross			$	31,723		$	29,342
Construction work in progress			845			994
Accumulated depreciation and amortization			(8,796)			(8,791)
Total plant, property, and equipment2			$	23,772		$	21,545

1A portion of independent power production assets are leased to others under operating leases. For information regarding CMS Energy’s operating leases of owned assets, see Note 8, Leases.

2For information regarding the amortization terms of CMS Energy’s and Consumers’ assets under finance leases, see Note 8, Leases.

3Consumers’ plant additions were $3.1 billion for the year ended December 31, 2023 and $2.3 billion for the year ended December 31, 2022. Consumers’ plant retirements, which include the impact of transfers to held for sale, were $856 million for the year ended December 31, 2023 and $290 million for the year ended December 31, 2022. Consumers plans to retire the J.H. Campbell coal-fueled generating units in 2025. Accordingly, in 2022, Consumers removed from total plant, property, and equipment an amount of $1.3 billion, representing the projected remaining book value of the electric generating units upon their retirement, and recorded it as a regulatory asset. For additional details, see Note 2, Regulatory Matters.

4Underground storage includes base natural gas of $26 million at December 31, 2023 and 2022. Base natural gas is not subject to depreciation.

Asset Acquisition: In May 2023, Consumers purchased the Covert Generating Station, a natural gas-fueled generating facility with 1,200 MW of nameplate capacity in Van Buren County, Michigan for $810 million. In August 2023, Consumers paid an additional $2 million as a result of a post-closing adjustment required under the purchase agreement.

Consumers accounted for the purchase as an asset acquisition, allocating the purchase price to the assets acquired and liabilities assumed based on their relative fair value. The original cost of the plant was $665 million and the seller had recognized $225 million of accumulated depreciation. Upon acquisition, Consumers recorded the net book value of $440 million and a plant acquisition adjustment of $370 million, resulting in an increase to plant, property, and equipment of $810 million. The remainder of the purchase price was allocated among various working capital accounts.

Intangible Assets: Included in net plant, property, and equipment are intangible assets. Presented in the following table are details about Consumers’ intangible assets:


In Millions
Description	Amortization Life in Years	December 31, 2023						December 31, 2022
		Gross Cost1			Accumulated Amortization			Gross Cost1			Accumulated Amortization







Consumers
Software development	3 – 15		$	772		$	543		$	846		$	593
Rights of way	50 – 85		229			64			218			61
Franchises and consents	5 – 50		16			11			16			10
Leasehold improvements	various2		11			7			9			6
Other intangibles	various		24			15			25			16
Total			$	1,052		$	640		$	1,114		$	686

1Consumers’ intangible asset additions were $80 million for the year ended December 31, 2023 and $116 million for the year ended December 31, 2022. Consumers’ intangible asset retirements were $142 million for the year ended December 31, 2023 and $104 million for the year ended December 31, 2022.

2Leasehold improvements are amortized over the life of the lease, which may change whenever the lease is renewed or extended.

Capitalization: CMS Energy and Consumers record plant, property, and equipment at original cost when placed into service. The cost includes labor, material, applicable taxes, overhead such as pension and other benefits, and AFUDC, if applicable. Consumers’ plant, property, and equipment is generally recoverable through its general ratemaking process.

With the exception of utility property for which the remaining book value has been securitized, mothballed utility property stays in rate base and continues to be depreciated at the same rate as before the mothball period. When utility property is retired or otherwise disposed of in the ordinary course of business, Consumers records the original cost to accumulated depreciation, along with associated cost of removal, net of salvage. CMS Energy and Consumers recognize gains or losses on the retirement or disposal of non‑regulated assets in income. Consumers records cost of removal collected from customers, but not spent, as a regulatory liability.

Software: CMS Energy and Consumers capitalize the costs to purchase and develop internal-use computer software. These costs are expensed evenly over the estimated useful life of the internal-use computer software. If computer software is integral to computer hardware, then its cost is capitalized and depreciated with the hardware.

AFUDC: Consumers capitalizes AFUDC on regulated major construction projects. AFUDC represents the estimated cost of debt and authorized return-on-equity funds used to finance construction additions. Consumers records the offsetting credit as a reduction of interest for the amount representing the borrowed funds component and as other income for the equity funds component on the consolidated statements of income. When construction is completed and the property is placed in service, Consumers depreciates and recovers the capitalized AFUDC from customers over the life of the related asset. Presented in the following table are Consumers’ average AFUDC capitalization rates:


Years Ended December 31	2023		2022		2021
Electric	6.5	%	6.2	%	6.2	%
Gas	5.8		5.6		5.6

Assets Under Finance Leases: Presented in the following table are further details about changes in CMS Energy’s and Consumers’ assets under finance leases:


In Millions
Years Ended December 31	2023			2022
CMS Energy, including Consumers
Balance at beginning of period		$	170		$	332
Additions		—			44
Net retirements and other adjustments		(34)			(206)
Balance at end of period		$	136		$	170
Consumers
Balance at beginning of period		$	146		$	332
Additions		—			20
Net retirements and other adjustments		(34)			(206)
Balance at end of period		$	112		$	146

Assets under finance leases are presented as gross amounts. CMS Energy and Consumers’ accumulated amortization of assets under finance leases was $64 million at December 31, 2023 and $88 million at December 31, 2022.

Depreciation and Amortization: Presented in the following table are further details about CMS Energy’s and Consumers’ accumulated depreciation and amortization:


In Millions
Years Ended December 31	2023			2022
CMS Energy, including Consumers
Utility plant assets		$	8,790		$	8,785
Non-utility plant assets		217			175
Consumers
Utility plant assets		$	8,790		$	8,785
Non-utility plant assets		6			6

Consumers depreciates utility property on an asset-group basis, in which it applies a single MPSC-approved depreciation rate to the gross investment in a particular class of property within the electric and gas segments. Consumers performs depreciation studies periodically to determine appropriate group lives. Presented in the following table are the composite depreciation rates for Consumers’ segment properties:


Years Ended December 31	2023		2022		2021
Electric utility property	3.8	%	3.7	%	3.9	%
Gas utility property	2.8		2.9		2.9
Other property	7.8		8.9		9.4

CMS Energy and Consumers record property repairs and minor property replacement as maintenance expense. CMS Energy and Consumers record planned major maintenance activities as operating expense unless the cost represents the acquisition of additional long-lived assets or the replacement of an existing long-lived asset.

Presented in the following table are the components of CMS Energy’s and Consumers’ depreciation and amortization expense:


In Millions
Years Ended December 31	2023			2022			2021
CMS Energy, including Consumers
Depreciation expense – plant, property, and equipment		$	1,050		$	990		$	975
Amortization expense
Software		92			103			108
Other intangible assets		5			5			4
Securitized regulatory assets		33			28			27
Total depreciation and amortization expense		$	1,180		$	1,126		$	1,114
Consumers
Depreciation expense – plant, property, and equipment		$	1,007		$	952		$	938
Amortization expense
Software		92			103			108
Other intangible assets		5			5			4
Securitized regulatory assets		33			28			27
Total depreciation and amortization expense		$	1,137		$	1,088		$	1,077

Presented in the following table is Consumers’ estimated amortization expense on intangible assets for each of the next five years:


In Millions
	2024			2025			2026			2027			2028


Consumers
Intangible asset amortization expense		$	89		$	88		$	87		$	81		$	73

Jointly Owned Regulated Utility Facilities

Presented in the following table are Consumers’ investments in jointly owned regulated utility facilities at December 31, 2023:


In Millions, Except Ownership Share
	J.H. Campbell Unit 3				Ludington				Other
Ownership share		93.3		%		51.0		%		various
Utility plant in service		$	1,752			$	619			$	443
Accumulated provision for depreciation		(812)				(227)				(97)
Plant under construction		1				5				11
Net investment		$	941			$	397			$	357

Consumers includes its share of the direct expenses of the jointly owned plants in operating expenses. Consumers shares operation, maintenance, and other expenses of these jointly owned utility facilities in proportion to each participant’s undivided ownership interest. Consumers is required to provide only its share of financing for the jointly owned utility facilities.

Consumers plans to retire the J.H. Campbell coal-fueled generating units and, in 2022, removed an amount representing the projected remaining book value of the electric generating units upon their retirement from total plant, property, and equipment and recorded it as a regulatory asset on its consolidated balance sheets. For additional details, see Note 2, Regulatory Matters.

Consumers is engaged in ongoing litigation with Wolverine Power related to Consumers’ authority to decide to retire the J.H. Campbell 3 coal-fueled generating unit under the unit’s Joint Ownership and Operating Agreement. For additional details on this dispute, see Note 3, Contingencies and Commitments—J.H. Campbell 3 Plant Retirement Contract Dispute.

Consumers and DTE Electric are engaged in ongoing litigation with TAES and Toshiba related to the 2010 engineering, procurement, and construction agreement with TAES, under which TAES contracted to perform a major overhaul and upgrade of Ludington. For additional details on this dispute, see Note 3, Contingencies and Commitments—Ludington Overhaul Contract Dispute.

Consumers Energy Company